August/September, 2003

From the Editor

Stealing Deli Sales

Category management may be here to stay, but for the deli department, this is particularly problematic because the same basic product is often sold in several places throughout the store.

If you want fresh lettuce, you will only find it in produce, and if you hanker to barbecue a nice New York strip, you look in the meat department.

If, however, you were in the mood to make a nice salami sandwich from Hebrew National salami, well, at my local supermarket you would have a few choices: you could go to the deli counter and they would slice it up for you just the way you like it. If the line is intolerable or you just don’t like people, the deli department also sells Hebrew National salami vacuum-packed and fanned out to show its stuff.

Of course, if you like your Hebrew National salami pre-sliced but stacked instead of fanned, you would have to walk to the opposite end of the store where the meat department has a refrigerated pegboard-type pack and, in the same display, the meat department also sells two different sizes of Hebrew National salami chubs.

Well, at least these are four distinct packaging methods. But if you were interested in good brie, it seems to depend on knowing some secret or just which you see first. My local supermarket has a specialty cheese case in the deli department and sells brie under a number of brands, including Cour Royale and Ile de France. But the dairy department is where you need to go if you prefer Président brand or Alouette brand.

There is no explanation given, no obvious price point difference, no packaging distinction. In fact most of these situations exist for no better reason than history. Hebrew National may have been selling those chubs to the meat department before the store even had a deli.

Increasingly, deli executives need to take notice. Up to this point, the obvious freshness of the deli separated it from the meat and cheese sold in meat and dairy almost as well as fresh produce is separated from frozen or canned. Recently, however, better production and packaging technology have combined with aggressive marketing to create a new threat to the deli department.

What else could it mean when Oscar Mayer promotes “Deli Style” shaved meats on its packaging and you can buy “Premium Carved” turkey under the Butterball brand?

Oscar Mayer isn’t typically sold in the service deli, so its message clearly says you can get that deli quality with the price and convenience you expect here in the meat case.

Butterball is interesting however. Although Butterball sliced poultry products are sold both from behind the service deli counter and in the self-serve deli case in my store, you can only get its “Premium Carved” product in the meat department. Marketing-wise, one wonders what message consumers are being given. If the line in the meat case is the “Premium Carved” line, where does that leave what they slice up in the deli?

Handling this issue is a delicate one for a deli director because it involves a lot of turf battles. But, at very least, deli directors should insist that in vendor’s branding and marketing efforts, they always position deli counter products as the freshest and highest quality.

Those who have responsibility for all perishables need to take a close look at this situation. It is fine to have secondary displays. Selling bleu cheese crumbles next to the bagged salads is a great idea. But the situations I’ve described serve no purpose in terms of serving the consumer.

There is no careful thought as to why some brands of brie are marketed in dairy and others are in deli. Stating it charitably, it’s a relic of ancient history; speaking more bluntly, it is often a consequence of whose buddy is buying the cheese.

What is interesting is that because these products are classified not only as different categories, but also as different departments, all our fancy analytical tools aren’t applied.

Would it work out better if the same brie were sold in both the deli and dairy case? The test doesn’t get done. Would sales of those Hebrew National products increase if there was one place where the whole family was displayed? We haven’t a clue. Are these new “deli quality” products influencing consumer attitudes toward buying at the deli? Are sales being affected? We just don’t know.

What we do know is that despite all the speeches about being customer-driven, the same old interdepartmental rivalries that have their roots in years gone by continue unabated. In many cases the compensation and evaluation systems that encourage interdepartmental battling continue unabated.

This means that shelf space, personnel and scarce marketing dollars are being wasted.

There are newer concepts now, with supercenters, warehouse clubs, organic-oriented markets and many others not necessarily having the same legacy costs.

Typically we think of these costs as health benefits and pensions for retirees, but often the most expensive legacy costs are not dictated by any contract but, rather, by the customs of an organization.

In competitive times like these, doing things the way they have always been done is likely to be a luxury precious few retailers can afford.  DB